Heartland - Castle Hill Gateway Site Redevelopment - Economic Analysis Boyded Industries Pty Ltd February 2016 URBIS STAFF RESPONSIBLE FOR THIS REPORT WERE: Director Princess Ventura Associate Director David Wilcox Consultant Sass Baleh Job Code EMR0321 Report Number 1 © Urbis Pty Ltd ABN 50 105 256 228 All Rights Reserved. No material may be reproduced without prior permission. You must read the important disclaimer appearing within the body of this report. URBIS Australia Asia Middle East urbis.com.au TABLE OF CONTENTS Executive Summary ............................................................................................................................................................................................................................. i Introduction .......................................................................................................................................................................................................................................... 1 1 Site Location and Context ...................................................................................................................................................................................................... 3 1.1 Subject Site ................................................................................................................................................................................................................................ 3 1.2 Surrounding Land Use ............................................................................................................................................................................................................... 8 1.3 Preliminary Redevelopment Concept ...................................................................................................................................................................................... 10 2 Draft Showground Station Precinct Proposal .................................................................................................................................................................... 11 2.1 Showground Station Precinct Proposal Economic Feasibility ................................................................................................................................................. 14 2.2 Summary ................................................................................................................................................................................................................................. 14 3 Drivers of Change .................................................................................................................................................................................................................. 16 4 Current and Future Employment Profile ............................................................................................................................................................................. 18 4.1 Current Jobs ............................................................................................................................................................................................................................ 18 4.2 Projected Jobs Growth ............................................................................................................................................................................................................ 20 4.3 The Hills Shire Employment Nodes ......................................................................................................................................................................................... 22 5 Commercial Office Market Analysis .................................................................................................................................................................................... 23 5.1 Sydney Commercial Office Markets ........................................................................................................................................................................................ 23 5.2 Commercial Success Factors .................................................................................................................................................................................................. 29 6 Mixed Use Development Case Studies ............................................................................................................................................................................... 35 7 Economic Benefits ................................................................................................................................................................................................................ 38 7.1 Orderly and Efficient Use of Land............................................................................................................................................................................................ 38 7.2 Housing Affordability ................................................................................................................................................................................................................ 39 7.3 Investment Stimulus ................................................................................................................................................................................................................ 39 8 Conclusion and Recommendation ...................................................................................................................................................................................... 40 Disclaimer .......................................................................................................................................................................................................................................... 41 URBIS HEARTLAND ECONOMIC ANALYSIS FINAL REVA Executive Summary . Major capital investment in a gateway site . Construction employment, related to the proposed development HEARTLAND – GATEWAY SITE OPPORTUNITY . Additional retail spending from a future on-site resident market Boyded Industries Pty Ltd (“the landowner”) is examining the potential for comprehensive redevelopment of its landholdings at 1 Packard Avenue, . The benefits of orderly and efficient use of land Castle Hill. Known as the ‘Heartland site’, the lands measure 2.24 hectares and benefits from an elevated position at the intersection of Windsor Road . Contributions to housing affordability and Victoria Avenue. The site is a gateway to the Castle Hill Trading Zone and Showground Station precinct, located at the south western entrance to . Investment stimulus the precinct. Increased vibrancy The landowner’s long term vision for the site is to retain existing car showroom uses, but to redevelop these as a premium service and showroom mixed use concept, potentially akin to the Audi centre at East SHOWGROUND STATION PRECINCT PROPOSAL Village, Zetland. The draft Showground Station Precinct Proposal supports the development of commercial (office) floorspace at the subject site, and also extensively In order to fund the commercial redevelopment of the site, and to create a throughout eastern and western edges of the Castle Hill Trading Zone. It high quality mixed use development outcome, the landowner would proposes B5 Business Development Zoning across the subject site and a ultimately seek to develop an appropriate residential apartment mix on the floor space ratio (FSR of 1:1) site. Independent commercial analysis by JLL exhibited with the draft East Village at Zetland, and other examples have demonstrated that modern Showground Station precinct documentation questions the potential to car showrooms can be successfully integrated into mixed use support large-scale commercial development within the Castle Hill Trading developments. The landowner is therefore seeking to utilise the locational Zone. Urbis’ own analysis in this report supports this view. advantages of the site, and leverage off increased accessibility afforded by the new Showgrounds metro station, to incorporate residential apartment There are a number of significant impediments to the investment and development within the subject site. demand for large-scale commercial office development within Castle Hill Trading Zone (and at the subject site) including: The creation of additional dwellings and employment at the subject site – in close proximity to the Showground metro station - could assist train . Lack of recognition of being an investment grade office precinct patronage. This can, in turn assist the payback to NSW state government against the costs of the Sydney Metro project. Lack of clustering of similar and associated office occupiers A mixed use development on the subject site has the potential to deliver a . “Confused” offering i.e. along similar lines to the challenges of broad range of economic benefits which may include: developing office product in Chatswood, St Leonards, Sydney Fringe etc. Retention and expansion of current employment uses URBIS HEARTLAND ECONOMIC ANALYSIS FINAL REVA EXECUTIVE SUMMARY i . Immediate proximity to high quality alternative office destination (Norwest). In the absence of demand for large scale commercial office development at the subject site, we consider that there may be broader economic benefits that could